UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 22, 2003 (September
19, 2003)
EPICEDGE, INC.
(Exact name of Registrant as specified in its charter)
TEXAS 001-15493 75-1657943
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5508 HIGHWAY TWO NINETY WEST
SUITE 300
AUSTIN, TEXAS 78735
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (512) 261-3346
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
ITEM 5. OTHER EVENTS.
As reported in our Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2003, as of June 30, 2003, we were in default under our Loan and
Security Agreement with Silicon Valley Bank ("SVB") dated November 6, 2002 as a
result of our failure to comply with the tangible net worth covenant set forth
in the Loan Agreement. As previously reported, we entered into a Loan
Modification and Forbearance Agreement with SVB on July 9, 2003 whereby SVB
agreed to forbear from exercising its rights and remedies under the Loan
Agreement until the earlier of (a) October 7, 2003 or (b) the occurrence of a
default under the agreement. As previously reported, the tangible net worth
covenant was revised and our line of credit of up to $1.3 million was to mature
November 5, 2003. As previously reported, the revised tangible net worth
covenant would have been breached if our tangible net worth decreased by more
than $30,000 from our tangible net worth as of June 30, 2003, which was
$1,170,000. As stated in the June 30, 2003 Quarterly Report, we were unable to
give any assurance that we would be able to maintain compliance with the revised
tangible net worth covenant and we considered it unlikely that we would be able
to avoid a breach of the tangible net worth covenant in the Loan Agreement prior
to maturity of the loan.
On September 19, 2003 the Company received a notice from SVB stating
that SVB had determined that certain events of default had occurred under the
Loan Agreement. The notice stated that SVB had determined that a Material
Adverse Change (as defined in the Loan Agreement) had occurred in the general
affairs, management, results of operations, financial condition and prospects of
the Company, including a violation of the Company's tangible net worth covenant
in the Loan Agreement for the August 2003 financial reporting period. The notice
stated that SVB is entitled to exercise any and all remedies available to SVB
under the Loan Agreement, including assessment of a default interest rate. The
notice also stated that SVB declared the entire amount of the Company's
obligations under the Loan Agreement immediately due and payable, and stated
that the amount of the obligations at September 19, 2003 was $1,250,732.52.
During September 2003 the Company's Chief Financial Officer, Robert
Jensen, and the Company's Executive Vice President of Enterprise Solutions, Rob
Cohan, each resigned to pursue other interests.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EPICEDGE, INC.
By: /s/ Mark L. McManigal
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Name: Mark L. McManigal
Title: Interim Chief Executive Officer
Date: September 22, 2003